Memo to right-wing blogs: Snow storms can distort job numbers

Right-wing blogs have attacked White House economic adviser Larry Summers' statement that heavy snowfall in February may distort the unemployment data for the month. In fact, economists reportedly say that snow can cause a temporary decline in employment and distort job statistics.

Right wing blogs hit Summers for blaming low February job numbers on blizzards

Hot Air: "[I]t sounds so laughably lame." On HotAir.com, blogger Allahpundit wrote: "A hypothetical for you. Assume that Summers sincerely believes this. Is this nonetheless a case where it'd be smarter politically not to mention it? Remember, their credibility among the public on the stimulus is utterly shot. The only reason this clip is getting play tonight on blogs, in fact, is because it sounds so laughably lame. All that being true, what does he gain by tossing it out there? Better to take your lumps on Friday if the numbers are low, vow that the new jobs bill will help, and cut your losses."

The Drudge Report: "Obama Adviser: Winter to 'distort' unemployment figures." The Drudge Report linked to a Reuters article about Summers' comments under the headline, "Obama Adviser: Winter to 'distort' unemployment figures." From the Drudge Report:

Jim Hoft: "White House Official Blames Snowmageddon For Already Miserable Unemployment Rate." On his blog Gateway Pundit, Jim Hoft quoted Summers under the headline, "White House Official Blames Snowmageddon For Already Miserable Unemployment Rate." He then wrote, "Well, you know what they say... 'You can't control nature,'" before embedding a video of President Obama discussing the earthquake devastation in Chile. Hoft continued: "Summers says that if the jobs report for February is awful to just ignore it."

But economists reportedly say that snow storms can affect employment

Summers: February blizzards "are likely to distort the [jobless] statistics." During a March 1 CNBC interview, Summers addressed the employment "statistics," and said, according to CNBC's transcript: "Who knows what the next number is going to be. The blizzards that affected much of the country during the last month are likely to distort the statistics. And in past blizzards, those statistics have been distorted by 100 to 200,000 jobs. So it's going to be very important to know, very important to look past whatever the next figures are to gauge the underlying trends. I think those underlying trends are going to show job growth soon. I think that, in large part, because of what is coming onstream. Several thousand new projects are coming onstream: building roads, repairing bridges and the like across the country."

WSJ: Snow "could make a mess of the February employment report." A February 10 post on the Wall Street Journal's Real Time Economics Blog noted that "[t]he snowstorm that's keeping people from Washington D.C. to Gary, Ind. hemmed in at home could make a mess of the February employment report," and that "[t]he storm has hit during the week that the Labor Department's Bureau of Labor Statistics takes its monthly snapshot of employment among households and employers nationwide. Since the storm has kept a large number of people from work, it could push up the unemployment rate, and lower the count of how many people are working." It also cited a Deutsche Bank economist noting the discrepancy:

Looking at what large snowstorms in 1994, 1996 and 2007 did to the jobs count, Deutsche Bank economist Joe Lavorgna reckons that the payroll count could fall by 90,000 workers. As a result, he estimates that there will be 35,000 jobs added in February, rather than the 125,000 he had penciled in. If the underlying trend isn't as positive as Mr. Lavorgna thinks, that could make potential gains into another month of declines.

MarketWatch: Storms will have a "big impact" on job numbers. A February 11 MarketWatch article quoted Wells Fargo Securities economist Mark Vitner as saying, "The February numbers are going to be a mess," because of the snow storms. The article also quoted Harm Bandholz, an economist for UniCredit Bank saying the storms "will perceptibly weigh on major economic data releases for the month of February." From the article:

WASHINGTON (MarketWatch) - The massive snow storms that blasted the East Coast this week could reverberate in the economic data for a couple of months, clouding any assessment of the health of the economy.

[...]

Although the snow storms won't have a major impact on the economy, they will have a big impact on the way the economy is reported.

"The February numbers are going to be a mess," Vitner said. "It's a downer, but how much of a downer, we don't know."

Employment, hours worked, wages and retail sales could decline sharply in February, only to rebound in March, if history is any guide. That movement will mostly reflect the timing of the snapshots of economic activity, and not a fundamental shift in the economy's direction.

"The two blizzards that struck the East Coast this week will perceptibly weigh on major economic data releases for the month of February," wrote Harm Bandholz, an economist for UniCredit Bank. Barring more storms next month, those economic indicators should show a big rebound in March.

The biggest impact should be on employment. The storms struck during the survey week for the establishment survey and the household survey. Each month, the government asks businesses and individuals about employment, hours worked and weekly pay for the week that contains the 10th of the month.

In the past, major storms that have hit during the survey week have had a major impact on employment, only to see a reversal the next month. Economist Joe LaVorgna of Deutsche Bank figures a snow storm in the survey week lowers payrolls by an average of 90,000 compared with the trend line.

MSN: "Economists estimate that between 90,000 and 150,000 jobs could be lost this month as a result of the storm." According to a February 12 article on MSN, "Economists estimate that between 90,000 and 150,000 jobs could be lost this month as a result of the storm." It quoted Stéfane Marion, National Bank Financial's chief economist as saying, "The storms will have a tangible impact on the hiring process, which is impeded when people can't get out and businesses are closed."

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